What do I need?

Yep, the other guys are correct. The headphone output has a dual purpose. It is also a mini-Toslink optical connector. Get a mini-Toslink to Toslink optical cable or a mini-Toslink to Toslink adapter plus and a sepaerate Toslink cable.

You might want to verify the above, but I'm 90% certain the headphone output is a dual purpose type.

Forget the toslink output from the Mac. High jitter, low sound quality.

Get a good self-powered USB to S/PDIF coax converter that works asynchronously up to 24/192. Make sure it has a good clock. This is actually more important than the DAC itself. Then get a good 1.5m S/PDIF cable to connect it to your DAC. The Ridge Street Audio is such a cable. I dont sell them and have no affiliation.

The clock in the Mac is not good enough for generate a low-jitter S/PDIF signal.

It's like a cartridge on a turntable. The master clock is where you want to put your money in digital audio.

Steve N.
Empirical Audio

Just to follow up, I went with a Musical Fidelity V-Link using a toslink connection to my CDP. Stupidly easy to use and it actually sounds pretty good with some music I'd uploaded from the original CDs into Apple lossless. The Lossless files are a slight sound degradation from the original CDs, but very slight, and for a mix for a party, more than acceptable.

It sure beats making mix tapes on cassette like we did in the old days.